Spending most of its life waiting for a turn on the open road, a classic car typically lives a pampered life in a structurally sound, climate-controlled garage equipped with a fire extinguisher,
sprinkler system and alarm. When the weather turns warm or there is
a chance to participate in a local car show, owners and their vehicles
will hit the road looking to show off fancy rims, glossy paint jobs and
lots of chrome. It is also when classic cars face the greatest risk of a
loss or an accident.

While the majority of auto claims are
legitimate, claims professionals should be
aware of some red flags that could indicate insurance fraud.

Auto insurance fraud can have a major financial impact on all car owners.
The billions of dollars lost to fraudulent
claims each year tack on an extra $200 to
$300 in premium costs to other drivers’
bills, according to a 2012 National Insurance Crime Bureau (NICB) report.

Knowing the markings of insurance
fraud may help insure that other car owners aren’t paying higher premiums as the
result of a few bad actors.

A quasi legitimate claim

A valid loss can turn sour when a car
owner claims the accident caused more
damage than actually matches the facts.
Known as soft fraud, these inflated
claims are often an attempt to have the
insurer restore the car rather than repair
it to its pre-loss condition. For example, the body shop presents an estimate
to have the entire car painted when the
facts of the accident only support repairing one panel.

Car owners, unable to find parts orhaving run into unforeseen restorationcosts, may consider slicing seats or pour-ing sugar into the gas tank, among otherploys, all with the intent of turning overthe headache or cost of restoration toan insurer.

Vandalism can also be a red flag for
fraud, especially when it involves keying. For instance, the car, left unattended, is keyed at random by a stranger.
However, the claim may grow suspicious
when multiple panels, the roof and hood
are damaged.

When a classic car, stored in a locked
garage, suddenly goes missing it’s difficult to give credence to a theft claim
when there is no or conflicting evidence
of forced entry. An intact garage with
the lock undisturbed or broken window
glass scattered on the outside of the garage may be signs that bring a theft claim
into question.

Burnouts, doughnuts or power slides,
among other ill-advised driving moves,
are sometimes just too tempting to resist
in many muscle cars of the ‘60s and ‘70s,
but the resulting accident can be hard to
acknowledge to an insurer. Some driv-ers might decide to spin a fantastic tale,
resulting in claims fraud, rather than admit to the facts. Their reluctance to stick
to the truth only complicates an otherwise covered loss.

Fact or fiction?

When it comes to claims fraud, distinguishing fact from fiction can sometimes
be tricky. Did the car accidentally slide
down the hill into a ditch or did it have
some help? Did someone really break
into the garage to vandalize the car? Why
didn’t anyone see the car being keyed on
a busy street?

Most claims are just what they seem…
legitimate. But an awareness of some red
flags may help reduce insurance fraud
and deliver the best possible service to
policyholders.

Rick Drewry ( RDrewry@amig.com) is a
senior specialist, claims, for American
Modern.